The Great Escape!

[downstreamvee]

...complete with Steve McQueen riding away on a motorcycle...

Anyway, here's the situation:

I bought my first home back in 2005 at the urging of my mother who insisted that buying a home was one of the best investments that I could ever make.

Funny how times change, ain't it?

Of course, all of that happened before I discovered the Way of the Mustache.

Thing is, I want to get out.  Where I live is in the middle of nowhere.  That means lots of gas driving back and forth to places, and more importantly, virtually no opportunity to see what other kinds of jobs there are out there for me.  Hell, I'm having a hard time even finding dates!

Apparently there aren't very many girls who are down for leaving the confines of the big city to come hang out with me.

My mortgage on it right now is around 130,000 or so.  I just refinanced this spring to bring my payments down from 1,100 per month to 866 per month. 

They're doing a good bit of building around my area, and I know that they've zoned some nearby lots around the Interstate for commercial, but I also know that it'll still be a while before any noticeable growth comes to my area.

In all likelihood, unless I want to wait ages, I'm going to end up taking a loss on my house if I sell it.  How much, I don't know.  A good bit of me is willing to just take the loss if it means the freedom of not being tied to a house.

Trouble is, I don't know what that would mean or how that even works.

Hell, I don't even freaking know where to start.

Help!

[footenote]

Start with getting data (an assessor, online resources like Zillow or Trulia, an agent) on how much your house is worth - you may be surprised.

Is renting your house an option, btw?

[downstreamvee]

Anything that gets me out of this house is an option.

Only thing is that I pretty much don't know my ass from a hole in the ground when it comes to renting.  But the same can be said for home sales, too.

Did a check on Zillow.  I actually wasn't surprised.  It showed being around 98k even though it sold for 135k.

What's the next step (once I get an actual assessor out here)?

[footenote]

1) Rental research assignment: find comparables in your area. (They don't have to be identical.) Calculate the rent-dollar-per-square-foot. Apply to your house to estimate rental income. Think also about expenses you will still incur like insurance and property taxes.

2) List items you might have to have fixed to meet code or that you could refresh to improve the home's appeal (ex: fresh paint). Estimate what those fix / refresh costs would be. (Note that you'll have to do those things before selling as well.)

Once you have one assessed value (or better yet, 2 or 3) plus the rental research in hand, you can decide what various decisions would mean to you financially. Create rent and sell scenarios and calculate the costs and incomes / benefits for each scenario.

[downstreamvee]

Excellent!  Thanks for the help!  I'll get right on it!

1) One concern that I have is that I might not find any houses for rent in my particular area.  About how wide of a path am I searching?  Is there some way to eyeball it if I don't find a rental rate?

I did look on Zillow.  It seems to think that my rental rate would be around $1,070.

[footenote]

What would you do if you wanted to rent a similar property in your area? Do that research as though you are a prospective renter.

(I undertand your concern btw - there may not be many potential renters in your area looking for your type of property.) Good luck!

(I'm hoping people who are landlords will join us here with more in-depth advice for you - particularly people who have rented non-metro area properties.)

[downstreamvee]

(I'm hoping people who are landlords will join us here with more in-depth advice for you - particularly people who have rented non-metro area properties.)

Seconded.

[downstreamvee]

Just played around with some preliminary research.  It gave me chills.  First, a quick skim of comparable houses (there were 3 for rent in social circle, all above a thousand) showed that the cheapest house in this area is going for 935 per month.  And my house is cooler than that one.

I also discovered that rent at an apartment in Decatur is going for right around 750 to 800. 

More to the point, it would only be adding 8 minutes to my commute, which, should I find a new place to work, would only be a temporary change.

[MsSindy]

You're def in a bit of a situation.  It sounds like if you try to sell, you'd be losing somewhere around $30-40k (accounting for RE commission).  If you rent, you'd probably also be negative cash flow since you would have vacancy, utilities, snow removal?, and other maintenance that tends to be higher with renters than owners.  Also, you would need to understand tenant law so you don't do anything that is against the law in your state and hurts your case in case you have to evict.  Strongly recommend that you check out biggerpockets.com and Mrlandlord.com - both have a wealth of information.

Another option that you might want to investigate is a lease-to-own option.  Quick google search will give you scads of information on it, but essentially it is for people that may not have the money for a down payment, so they are willing to pay a higher rent/lease amount and part of that money goes towards a future down payment, if in future years they decide to purchase your house.  This way you typically get people that take care of the house better because they think they may own it in a couple of years, or if they don't buy it, you will have received a higher-than-market lease payment.  I'm over-simplifying a bit, but that is the jest of it.  There's a lot of different ways to structure a deal like this.

You  definitely need to do some more research and educate yourself before making any decisions.  You're probably better off on one of the real-estate specific sites.

[Daleth]

Another option that you might want to investigate is a lease-to-own option.  Quick google search will give you scads of information on it, but essentially it is for people that may not have the money for a down payment, so they are willing to pay a higher rent/lease amount and part of that money goes towards a future down payment, if in future years they decide to purchase your house.  This way you typically get people that take care of the house better because they think they may own it in a couple of years, or if they don't buy it, you will have received a higher-than-market lease payment.  I'm over-simplifying a bit, but that is the jest of it.  There's a lot of different ways to structure a deal like this.

That is a brilliant suggestion. The thing to google is "land contract." Make that "land contract [name of state your house is in]." The googling is just to give you a general idea; you obviously need a lawyer to draw up the actual contract. But the gist is--and we've done this, we sold a property this way--you find someone who wants to own but can't get financing (no down payment or whatever), but passes the normal credit and criminal background checks you would do on a rental tenant (see e.g. youcheckcredit.com); you and they sign a contract, provided by you, under which they pay $X/month of which part counts as rent and part counts towards their eventual ownership (that's a standard part of land contracts but as the seller you can see the appeal here--not every dollar counts towards the purchase); this contract also says what the sale price is and when they get to buy it--for residential normally you might have something like, once the payments that count towards equity add up to 20% of the agreed-upon sale price, tenant has X amount of months to pay the remaining 80% (normally that would be when they apply for bank financing and get a mortgage, which enables them to pay you that 80% and get their name on the title).

Land contracts are generally pretty draconian in that if the buyer/tenant fails to pay their monthly payments on time, you can kick them out just like a rental tenant, and keep ALL the money--not just the part that counted as rent.

When we sold ours we calculated what the monthly cost to us was (everything, including insurance of course) and then set the monthly payment $500 higher than that, with that $500 counting towards the buyer's purchase of the building. We also said in the contract that if the monthly cost to us went up (e.g. property tax or insurance hike), that increase would come out of the $500 and only the remainder would count towards the purchase. And I'm glad we had that in there, because the buyer did something stupid that caused our insurance premium to spike, and he ate that cost (as well he should have) because our contract said he would.

[arebelspy]

That is a brilliant suggestion.

Agreed, owner financing can be a very good exit strategy when others may not work.

The thing to google is "land contract." Make that "land contract [name of state your house is in]." The googling is just to give you a general idea; you obviously need a lawyer to draw up the actual contract.

A land contract and a lease option are two different things.  They are both forms of seller financing (two of six that I can think of off the top of my head), but they are not equal, so suggesting one and saying to google for the other may not help.

I would do the latter, not the former, as a seller.  As a buyer, I'd be open to either.

I also don't necessarily agree you need a lawyer to draw up the actual contract.  I've handwritten ones before just fine.    Obviously if you're in a state where you need a lawyer to close a property that will change.

[downstreamvee]

Awesome ideas folks!  Thanks very much!

@MsSindy:  I'm in Georgia, so it's generally unlikely that I have to worry about snow removal.  Not that we don't have other crap to deal with, instead.

@Daleth:  Does The Doctor know that you're hanging out over here? 

@arebelspy:  Holy cow!  A spy!  Quick!  Somebody get that dude a beer!

Anyway, yeah, I'll definitely look into those and do some more research.  Thanks especially for the links and ideas!  I'll report back once I've learned some more.